So, here's my proposal: when NEP is initially put out by Lenin in 1921, it's subtly different, designed to allow for a "leashed" development of capitalism, pointing to the fact that Russia is an underdeveloped state not truly capable of a transition to socialism. The specifics aren't too important, other than a) creating potential for large scale private enterprise (thoroughly subject to state intervention), and b) avoiding the eventual Scissors Crisis, need for collectivization, etc, that historically pushed the Soviet Union to switch to a full command economy. Since Lenin historically was a quite flexible political thinker, and also pretty much the unquestioned leader of the early Soviet state for his healthy life, we'll also propose he doesn't get shot as seriously by Fanny Kaplan, and this butterflies away his early death and strokes. He thus sidelines Stalin during the 20s, runs the USSR into the 1940s and 50s, and is succeeded by a more internally-democratic CPSU than the Stalin-dominated one - more like Deng or Khrushchev's Parties than Stalin or Mao's.
"
Get down to business, all of you! You will have capitalists beside you, including foreign capitalists, concessionaires and leaseholders. They will squeeze profits out of you amounting to hundreds per cent; they will enrich themselves, operating alongside of you. Let them. Meanwhile you will learn from them the business of running the economy, and only when you do that will you be able to build up a communist republic. Since we must necessarily learn quickly, any slackness in this respect is a serious crime. And we must undergo this training, this severe, stern and sometimes even cruel training, because we have no other way out.
You must remember that our Soviet land is impoverished after many years of trial and suffering, and has no socialist France or socialist England as neighbours which could help us with their highly developed technology and their highly developed industry. Bear that in mind! We must remember that at present all their highly developed technology and their highly developed industry belong to the capitalists, who are fighting us."
-Vladimir Lenin, section of
Shall we be able to work for our own benefit? in "
The New Economic Policy and the tasks of the Political Education Departments" (Report to the Second All-Russia Congress of Political Education Departments - October 17 of 1921)
While I think this comment is correct in the possible flexibility of the Leninist NEP, having Lenin led so much of the early Soviet Union could actually not work because it is possble that Lenin's death is a biological factor.
His father, Ilya Ulyanov, died at his 54 years. Lenin died at his 53, a few months before his 54th birthday, and it is maybe, not coincidence.
"
The extent of Lenin’s cerebral atherosclerosis, with its marked calcification of the involved cerebral arteries, was strange to the extreme, particularly so, because Lenin had none of the risk factors known to be associated with premature cerebrovascular disease (hypertension, smoking or diabetes)," Philip Mackowiak, a professor at the Medical Care Clinical Center in Baltimore, Maryland.
In 2011, Dr. Cynthia St. Hilaire suggested that the cause of Lenin's premature atherosclerosis lies in a mutation in the NT5E gene. He might have suffered from mutations, resulting in paralysis and premature death.
"
We believe that Lenin had a rare disorder, one likely inherited from his father, who seems to have died under similar circumstances," Mackowiak said. "
When we learned of St. Hilaire's discovery of the NT5E mutations as a cause of extensive arterial calcifications, a variant of the mutation seemed to us to be the best explanation for Lenin's calcified cerebral vessels. We also wondered if the intense pressure Lenin was under as leader of the communist world revolution had a role in causing his premature cerebral atherosclerosis."
You are more likely to achieve this if Stalin continues to adhere to the NEP to some extent or the "Right Opposition" within the Party (the more famous is Bukharin, who did inspire part of the Deng Xiaoping theory) is more successful.
Or maybe there are other PoD's. I am not totally sure.
In its early days, of course, this Soviet economy is isolated, just like historically, since that wasn't a choice but an external imposition. But when the Great Depression hits, it's finally given the opportunity to start trading again, being able to appeal to the damaged western economies as a trade partner, and it takes advantage of it to integrate itself into the global economic system. With insufficient butterflies to directly argue against it, WW2 still hits. Maybe it still goes the same way (1939 Western entry, 1941 forced Soviet entry), or perhaps not. I suspect Lenin would be rather less willing to trust Hitler than Stalin was, and obviously he won't need to purge the military, so perhaps we'll see the Soviets also step in to protect Poland, and a 1939-40 WW2 in Europe which ends in much the same way, with a devastating defeat of the Nazi regime and Soviet influence and puppet governments in much of Eastern Europe. Either way, there's no way that Hitler wins, and the Soviets can only really do better - it would be hard to do worse.
I remember one person (a Russian who lives in Sweden and was apparently a propagandist during the late Soviet Union) arguing that it is AFTER WWII and the death of Stalin, that the Soviet Union actually had the material conditions to match modern Chinese economic policy.
But I don't know whether to really take this into account.
This person argued that Beria COULD have led the country in this direction.
Is this alternate history plausible? What would be the consequences, long-term? Presumably there would still be a Cold War, albeit a very different one.
For this you need the Soviets to not be 'decoupled' from the international market, the sanctions and other restrictions that historically existed against the Soviet Union screwed them up a lot in the international trade aspect (and affected their internal politics as well).
I would say is plausible, but you need the right material conditions to do it.
A different world, and a different Soviet Union.
Was this Gorbachev's plan?
I guess you could consider it more democratic, in the sense that the PRC under Xi is more democratic than the PRC under Mao. I'm not imagining it as a multiparty state, though, just a more stable and well-managed single party one.
Deng's comment on Gorbachev after their meeting: "
This man may look smart but in fact is stupid." (found in My Personal Memories as Deng Xiaoping's Interpreter)
One explanation that I like is that Gorbachev tried to liberalize the Soviet Economy and Politics, while Deng just tried to liberalize the economy and sought to keep the Communist Party as the sole political director of the country.
In short, yes, Gorbachev tried some measures of Chinese socialism, but he simply did not have the correct material conditions to carry out such measures.
A curious case, if we say it ends like China, we will see a debate in the reform about inflation:
"
A few days after Zhao’s dismissal, on June 30, the mayor of Beijing read out his report on the protests. Zhao had sought to overthrow the socialist order in China and replace it with a liberal capitalist system, the mayor declared. He offered damning evidence of how Zhao developed his supposed plot: “Especially worth noting is that last year on September 19, Comrade Zhao Ziyang met with one American ‘extreme liberal economist.’”
Which “extreme liberal” had Zhao met on September 19, 1988? The answer opens the door to a strange, incongruous tale, because the American economist who had allegedly plotted with the general secretary of the Chinese Communist Party was none other than Milton Friedman.
FEAR OF LIBERALS
Friedman first traveled to China in 1980. When he celebrated his 68th birthday that year, he was perhaps the most famous economist in the world. He had appeared on the cover of Time in 1969, in an issue that focused on the “new values” that would define the 1970s. With his diminutive stature, forceful personality, and Cold War faith that the free market would inevitably vanquish communism, he was an instantly recognizable public personality, equally at home walking the plush carpets of the White House and expounding to the public from television studios.
Academically, Friedman had established himself as an expert on inflation and consumer behavior. Believing that people behave rationally in their own self‐interest, he predicted in 1967 that a sustained period of inflation would not drive down unemployment, directly contrary to the mainstream view at the time. If one test of an economist is the ability to predict economic phenomena and their consequences, Friedman triumphed. He won the Nobel Prize in 1976.....
*******
So Friedman was astonished when, in late 1979, he received an official invitation to visit China. The United States and China had normalized their relations that January. Academic exchanges had just resumed, and Friedman would be part of the first set of scholars invited to give lectures in China through a new official program. Friedman quickly accepted, but he confessed in a letter to a friend that the invitation was “a phenomenon that I find almost literally incredible.”
Why had this socialist country invited Friedman, of all people, to provide economic advice? One word: inflation. Under Mao, prices were fixed by state fiat, repressing any inflationary pressures for decades. Propagandists regularly announced that communism had successfully eradicated inflation in China, and they painted inflation as a scourge of capitalist (or “liberal”) societies.
As China’s rulers under Deng Xiaoping began to loosen controls and free up prices, they knew that inflation might appear. With his academic achievements in predicting the “Great Inflation” of the 1970s, Friedman seemed a natural fit to help teach the Chinese leaders how to avoid this alarming prospect. But their perception of Friedman was incomplete, to say the least. At one internal meeting of banking officials, a young bureaucrat explained the “two factions” in American economics in broad strokes: “Keynesians advocate inflation, and Friedman is opposed to inflation.” They seemed completely unaware of Friedman’s commitment to spreading the free market gospel.
Friedman delivered four lectures on topics such as “the mystery of money” and “the Western world in the 1980s.” His audiences of officials and scholars listened as he dismissed the idea that inflation appeared only in capitalist societies. Inflation was neitherinnately “capitalist” nor “communist.” Instead, he said, government itself was the root cause of inflation, which could be cured only by “free private markets.”
To the Chinese economists in the audience, these ideas were radical; to many of the country’s less liberal leaders, they were menacingly extreme.
Shortly after Friedman departed China, a prominent conservative elder delivered a speech that criticized liberalizing foreign influences as a grave danger to Chinese socialism. “Foreign capitalists are still capitalists,” he warned. “Some of our cadres are still very naïve about this.”
In the years after 1980, China boomed under the policies of “reform and opening.” Zhao Ziyang steered the economy as the country’s premier. Deng directed him to figure out how to bring the market reforms that had quickly taken hold in agriculture into the cities and state‐owned enterprises, which made up the bulk of the economy — and to do so without destabilizing society as a whole.
As one element of this strategy, Zhao and his network of economists devised an ingenious approach. Enterprises would still have to meet planned quotas, and everything they produced to meet the quotas would still be sold at a state‐set price. But beyond those quotas, enterprises could produce whatever quantity of goods they wanted and sell them at whatever price consumers would pay. It was a “dual‐track” system: the old system remained in place, but it very quickly became only a small part of a much larger and more vibrant economy. Think of the old planned economy as a shriveled bonsai; Zhao didn’t suddenly stop watering it, he just planted a forest around it.
This policy worked, and growth skyrocketed in the years from 1984 to 1988. But it was a temporary solution; the unresolved problem of prices remained a thorn in the side of China’s rulers. In the summer of 1988, Deng Xiaoping, the paramount leader, finally lost his patience. He decided to order an overnight liberalization of the price system. A crisis immediately followed. A fear of inflation seized the country, and a survey of 32 cities revealed that prices had risen nearly 25 percent in the month of August. Soon conservatives opposed to market liberalization were preparing retrenchment policies to roll back the reforms and stabilize the economy. At this moment of crisis, Zhao made a characteristically bold decision. He would meet with a leading foreign economist to seek advice about how to get inflation under control — and not just any economist, but the notoriously outspoken Milton Friedman, once again called upon for his expertise on inflation. Subsequent events would show that Friedman was a risky choice indeed...
*******
At the Cato conference at the Shanghai Hilton, he sat behind a table in the front of the room, his head just barely peeking over the microphone and jug of water provided for him. Next to him sat a Communist Party economist named Pu Shan, who wore a tightly buttoned Mao jacket and a crewcut like a silver helmet. Friedman gave his usual impassioned case for free private markets. In his response, Pu Shan upbraided the distinguished visitor and asserted that China’s economic system might, in fact, prove superior to an economic system based on free private markets. Friedman dismissed the critique as the political correctness of an uncreative apparatchik — but it was clear that Friedman’s evangelizing message had once again failed to find as warm a reception from Chinese leaders as he had hoped.
In what was the trip’s most dramatic development, Friedman received word that Zhao had requested to meet with him. At the suggestion of his Chinese hosts, Friedman submitted a memorandum to Zhao, that laid out his views on the best direction of China’s reform. Friedman began the document with a direct refutation of the central Chinese idea during this period that China’s experiences were exceptional and that “Chinese characteristics” were an aspect of every problem the country faced. “Every country always believes that its circumstances are special,” Friedman wrote, but the acceptance of freemarket principles would be necessary regardless. Friedman advocated that China decontrol prices in “one bold stroke” and “end” inflation by tightening money and limiting the government deficit financed by money creation and credits granted to enterprises.
When they met in Beijing, Zhao Ziyang thanked Friedman for his memo but attempted to set the discussion on his own terms. Although he acknowledged difficulties in realizing the goals, Zhao referenced the Party’s 1987 decision to establish an economy in which “the state manages the market, and the market guides the enterprises.” Friedman’s response was highly critical, as he believed the 1987 decision was “impossible”: “The state is organized from the top down; the market, from the bottom up. The two principles are incompatible.” He asserted that the dual‐track system was making goods “more expensive, not less,” because, although prices were still held down, the costs of queuing, shortage, and other negative effects were high. Thus, inflation would persist as long as the dual‐track system remained in place, Friedman argued. However unconvinced Friedman and Zhao may have been with each other’s arguments, they spoke for nearly two hours with a friendly rapport. Friedman was clearly impressed with the Chinese leader’s command of economics. He remarked, “On hearing your analysis of China’s economic situation, I believe you are a professor by nature"...
******
ZHAO’S DEMISE
Yet almost immediately thereafter, the reform agenda in China collapsed. Soaring inflation made daily life more expensive and hurt job prospects for young people graduating from college. Many Chinese were angry about pervasive corruption and the lack of political reform.
Students nationwide launched protests centered on Beijing’s Tiananmen Square in the spring of 1989...
-
In the secret halls of the leadership compound, the top party chiefs fought fiercely over whether to impose martial law and quell the protests by force. Zhao vociferously opposed turning the military on the people, but his views lost out after a string of combative meetings in May. Following the last of those heated sessions, Zhao walked out to the square to speak to the students directly. He held a small megaphone close to his mouth as his voice filled with emotion. “We came too late,” he told the students. “Whatever you say and criticize about us is deserved.”
The next day, with the approval of Deng Xiaoping, martial law went into effect across the land. The bloody crackdown began during the night of June 3. By the morning of June 4, Tiananmen Square had been emptied of the students who had camped there for weeks....
-
Zhao was formally denounced for supporting the protests, “splitting the party,” and undermining socialism. The engagement with foreign economists pursued by Zhao and his network of economists came under direct assault, evidence of his alleged mission to push China to abandon socialism. And there was the Beijing mayor’s report citing Milton Friedman. Zhao’s name was eliminated from official histories and has rarely appeared in print in China.
*******
FRIEDMAN RETURNS TO CHINA
But Deng Xiaoping refused to abandon all the progress that China had made since the late 1970s. On January 17, 1992, he traveled to southern China for what was supposedly a family vacation. Putting his accumulated credibility on the line, the 88‐year‐old Deng surprised the world by giving a series of informal speeches urging the resumption of intensive reforms. The gambit worked: by mid‐February, after two and a half years of deep freeze, reformers burst back onto the scene with sizzling vigor. Although Zhao remained under house arrest, many of his policies resumed — without acknowledgment of their supposedly treacherous origins.
Even the “extreme liberal” Friedman was welcomed back to China. Traveling to Shanghai and Beijing in October 1993 for official meetings, he was astonished at the rapid pace of development. At the end of his trip, he returned to the Great Hall of the People, the site of his fateful encounter with Zhao, to meet with China’s new president, Jiang Zemin.
In more recent years, the senior echelons of the Chinese Communist Party have occasionally returned, like Zhao 30 years ago, to an interest in Friedman’s inflation‐fighting wisdom. Senior officials at the People’s Bank of China, the central bank, have even quoted from Friedman’s Free to Choose to describe their anti‐inflationary goals. A more extreme and outspoken pro‐market faction than existed in the 1980s has also emerged, with economists like Zhang Weiying and his mentor Mao Yushi asserting their intellectual lineage from Hayek and Friedman and calling for the radical removal of the state’s role in the economy. Mao Yushi, now 88, founded the Unirule Institute of Economics, dedicated to free markets and reform. In 2012, the Cato Institute awarded him the Milton Friedman Prize for his advocacy of individual rights and free markets. And in 2015, Cato published a book of essays on reform by Zhang. Mao Yushi is regularly attacked as a “traitor” and a “slave of the West” — and in January 2017 the Chinese authorities closed down the social media accounts and websites of Mao and Unirule — but he continues undaunted.
I asked Mao in an interview for The American Scholar why he thought Friedman remained an important figure in China today. “Since the new government came to power, China’s reforms have moved backward,” he told me. “China is a state that opposes liberalism. The government places many unnecessary restrictions on the people’s freedoms … so it is extremely important to promote liberal ideas in China. And this is the reason why [Friedman] is in demand.”
*******
WHITHER REFORM?
How can we understand the mixture of wariness and interest that occasioned Milton Friedman’s invitations to China? China’s rulers clearly believed that economics — and economists — could be dangerous. But their consistent interest in this particular interlocutor, as unpredictable and pugnacious as he was, reveals their extraordinary fascination with this dangerous knowledge. They needed the best ideas from around the world to allow the Chinese economy to boom, and sometimes that required dealing with thinkers whose expertise was invaluable but whose views were unpalatable. No outsider personifies this complex duality better than Milton Friedman.
The exploratory, open‐minded spirit that brought Friedman to China has weakened considerably there today. In August 2013, shortly after Xi Jinping came to power and began establishing his centralized, strongman style of rule, cadres from across China massed in Beijing to hear him speak. Facing the assembled officials at this National Propaganda and Ideology Work Conference, Xi painted an ominous landscape in dark brushstrokes. “Western anti‐China forces” are seeking “to overthrow the leadership of the Chinese Communist Party and China’s Socialist system,” he reportedly told his subordinates. In the face of these threats, Xi said, the party must “dare to bare the sword". "
-The article "
The Little‐Known Story of Milton Friedman in China"
